Immigrant Enterprise in the New York Garment Industry
Author(s): Roger Waldinger
Source: Social Problems, Vol. 32, No. 1, Thematic Issue on Minorities and Social Movements
(Oct., 1984), pp. 60-71
Published by: University of California Press on behalf of the Society for the Study of Social Problems
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SOCIAL PROBLEMS, Vol. 32, No. 1, October 1984
IN THENEWYORK
IMMIGRANT
ENTERPRISE
GARMENT
INDUSTRY*
ROGERWALDINGER
The City College of the City University of New York
Hispanicimmigrantsare revitalizingNew YorkCity'sailinggarmentindustryby opening small, and largelyunseen, factories.This paper analyzes the economic environment which has given rise to this immigrantenterpreneurship,and the business
organizationand industrialrelationsof the enterprises themselves. Throughinterviews with 96 Hispanicowners of garmentfactories, I reveal the advantageswhich
the immigrantentrepreneurshave over more established garmentfactoryowners in
adaptingto the marketplaceand recruitinga reliableworkforce.Whilethe smaHimmigrantfirmslookto an outsiderlikemere "sweatshops:'they in fact providea ladder
for immigrantsocial mobilityby passing on skills.
The papered-over windows on a string of small storefronts in Brooklyn tell the passerby that
yet another street has succumbed to inner-city blight. What the windows conceal is that the stores
have been put to new use. Inside, women are hunched over sewing machines. The floor is covered
with piles of unfinished clothing parts. In the rear, clouds of steam envelope the only male worker
in the shop as he lifts and shuts a heavy pressing machine. The shop's owners are two brothers
from the Cibao, an agricultural region in the northern part of the Dominican Republic. Not so
long ago they worked as pressers and pleaters for someone else. Now they employ 15 workers- all
of them Dominican immigrants, most of them from the Cibao.
New York's garment industry, the heart of the city's manufacturing complex, has long been in
decline. But in recent years, the industry has shown signs of renewed vigor. First came a wave
of cheap labor from Latin America and other areas of the Third World. Then, immigrants began
opening small factories themselves. They have succeeded where native owners have all too commonly failed.
Why has the garment industry proven to be a fertile terrain for these new immigrant entrepreneurs? Why do they succeed when many natives have succumbed to tough international
competition? Immigrant enterprise in the U.S. garment industry and other economic fields is attracting growing scholarly attention. But most of the research has been too narrowly focussed
on predisposing factors in the immigrants' home environment to tell us much about the niches
in which immigrant business can grow and the organizational characteristics that favor the immigrant firm. Cultural analysis has emphasized those factors which either generate individualistic
behavior, as in the case of Jews (Glazer, 1954) and Koreans (Kim, 1981) or else promote group
solidarity, as in the case of early 20th-century Chinese and Japanese immigrants (Light, 1972).
Other researchershave argued that small-business minorities tend to immigrate with the intention
of returning to their home country, and stress the importance of this sojourning orientation and
their solidaristic activities in the face of hostility in the host society (Bonacich, 1973: Bonacich
and Modell, 1980).
* An earlier version of this
paper was presented at the annual meeting of the American Sociological Association, San Francisco, September 1982. This study was supported by grants from the ILO Program in International Labor Studies, the Employment and Training Administration, the U.S. Department of Labor, and the
Joint Center for Urban Studies. The author thanks Catherine Benamou and Eduardo Silva for help with the
research, and Tom Bailey, Gerald Handel, and the anonymous Social Problems reviewersfor their comments.
Correspondence to: Department of Sociology, NAC 6/145, The City College-CUNY, 138th Street at Convent Avenue, New York, New York 10031.
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ImmigrantEnterprise
61
What the literature lacks is an analysis of the economic environment in which immigrant
entrepreneurs function and the implications of this environment for the organization of the
immigrant firm. Group solidarity or a willingness to take risks may be a necessary condition of
entrepreneurship, but neither is a sufficient condition for business success. True, a penchant for
risk-taking and a supply of cheap family or immigrant labor make starting a small business
easier. But these factors count for little in industries where the small firm is inherently uneconomical. To grow and prosper the immigrant owner needs first a niche in which the small firm is
viable, and second, access to ownership opportunities. The latter factor depends on the extent
to which natives are also vying for entrepreneurial positions.
Conditions of entry, then, are affected by the structure of industry and the number of vacant
business positions. But once the immigrant firm is in business, does it enjoy significant competitive advantages; and if so, why? Answering these questions is difficult in the absence of a broader
understanding of the labor market for small businesses and of the organizational problems
confronted by small firms in general. Any attempt to explain the growth of immigrant business
should: (1) relate immigrants' informal resources to the demands of the economic environment;
and (2) show how the deployment of these resources distinguishes immigrant firms from nativeowned competitors.
In contrast to previous studies, this paper suggests that the demand for small business activities
and the supply of existing and potential business owners interact to generate immigrant
entrepreneurship. The demand for small business activities emanates from markets whose small
size or susceptibility to flux and differentiation limit the potential for mass production and mass
distribution. These conditions favor small-scale enterprise, thus lowering the entry barriers to
immigrants with limited capital resoures. However, the influence of instability makes it difficult
for firms to secure a strongly attached labor force. Consequently, small firms confront the
chronic problem of organizing the labor force and developing a mechanism for the transmission
and maintenance of skills.
On the supply side, the number and characteristics of groups vying for small business positions
affect recruitment to enterpreneurship.Where the prestige of small business is low and the conditions of work poor and particularly demanding, competition with the native-born entrepreneur
is likely to be minimized; hence, immigrants have easy access to business ownership. Moreover,
since the labor market in small firms is generally unstructured, immigrants' connections to the
broader immigrant community are a source of considerable advantage. Family and ethnic ties
enable immigrant owners to mobilize, train, and maintain a stable labor force, and to keep labor
costs down.I
This paper describes the business activities of Hispanic immigrants in New York City's garment
industry in 1981 and 1982. The owners were immigrants from Latin America, mainly the
Dominican Republic, Colombia, and Ecuador; most of them arrived in New York after 1965
when large-scale immigration to the United States resumed. The New York garment industry
represents a critical case of ethnic enterprise because its market structure and technology typify
the conditions under which small firms emerge. Moreover, two recent developments in the U.S.
garment industry - a simultaneous increase in the importance of the largest firms and in the
number of small ethnic firms - permit a case study of the relationship between ethnic enterprise
and the workings of the broader economy.
1. Alejandro Portes and his associates (Portes, 1981; Wilson and Martin, 1982; Wilson and Portes, 1980),
suggest that ethnic entrepreneurialdevelopment takes place when immigrant firms are linked in related input,
output, and labor markets through an "enclave economy." This hypothesis is essentially a description of the
possible organization of the ethnic economy and is based, moreover, on indirect evidence. As explanation,
the enclave hypothesis is lacking, since it begs the question of what it is about immigrants and/or the situation
that they encounter which enables them to organize their economic activities in such a distinctive way.
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62
WALDINGER
This paper is divided into three sections. First, I discuss my method and data. Second, I look
at patterns of business development. Finally, I analyze business organization and industrial
relations.
METHODAND DATA
This paper is based on a study I made of immigrants in New York City's garment industry from
1979 to 1982 (Waldinger, 1983). I observed industry trends over the three-yearperiod; interviewed
key informants in labor and management; searched for relevant literature in trade journals,
government reports, and primary and secondary studies; and conducted several surveys of firms
stratified by company function and ethnicity of the owner.
The data for this paper are taken from interviews I conducted in 1981and 1982 with the owners
of 96 small garment factories in New York City. My initial interest was in how immigrants were
recruited and absorbed in the garment industry and I began with a sample of factory owners
designed to be representative of the types of firms active in New York's garment industry. In the
course of these interviews I discovered that a number of owners were immigrants themselves, and
I realized that work organization in these immigrant-owned firms took a distinct form. As the
interviews progressed I uncovered a pattern of emerging Hispanic immigrant enterpreneurship
and then set out to discover the exact locations of factories owned by Hispanic immigrants. First
I concentrated on three neighborhoods - Corona-Jackson Heights in Queens, Sunset Park in
Brooklyn, and Washington Heights in upper Manhattan. All contained large Hispanic populations, and though each was distinctive in terms of national composition and settlement patterns,
together they were representativeof the Hispanic immigrant population. In each area I conducted
a street census of all discernible garment factories, most of which were hidden in abandoned
commercial space. I cross-checked my findings with listings in special reverse telephone books
which organize phone subscribers by address: from these listings I obtained additional firms
whose names suggested some activity related to the garment industry. I also added new firms to
the list as I discovered them in the course of interviewing. This search of the three neighborhoods
produced a list of 123 firms; initial inquiries reduced the number of firms likely to be owned by
Hispanics to 101. Second, I searched the manufacturing districts in downtown Manhattan.
Because the factories there are concentrated in multi-storied buildings, time constraints
prohibited a street census. Instead, I asked key informants from the International Ladies'
Garment Workers'Union (ILGWU) to pinpoint loft buildings in two areas where high concentrations of immigrant-owned firms were likely to be found -the central "garment center" and the
"BroadwayCorridor," a low-rent industrial district in lower Manhattan. I used reversetelephone
books to compile a list of all of firms in the buildings chosen and then visited these loft-buildings
to establish the ethnic identity (Hispanic/non-Hispanic) of all firms on the list. This search
produced a list of 63 firms.
I was able to interview the owners of 96 of the total list of 161 firms which were probably or
definitely owned by Hispanics. For the remaining 65 firms I either could not find the owner or
the owner refused to be interviewed. Of the 96 owners I interviewed, 60 were from the Dominican
Republic and the remaining 36 were from various other countries in Latin America, principally
Colombia and Ecuador. All of the owners had immigrated to the United States since 1960. Unless
the owner preferred to speak English, all the interviews were conducted in Spanish. I conducted
70 interviews; the rest were done by two bilingual research assistants. The interviews, which were
done on the factory premises, were mainly open-ended and lasted from 20 minutes to an hour
and a half. These interviews allowed me to gather data on company histories; patterns of recruitment and training; ethnic friendship and kinship connections; production practices and technology; links wtih other concerns; labor relations; and the occupational and migration
experiences of the owners.
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ImmigrantEnterprise
63
PATTERNSOF BUSINESS
Effects of MarketStructure
The growth of large firms and the movement of manufacturing from its older sites in the
Northeast to low-wage areas in the South and abroad have reshaped the face of U.S. industry.
However, the U.S. garment industry remains largely a province of small firms-as it has been
since the industry's emergence in the late 19th century. Moreover, New York City, the traditional
center of designing and merchandising, still contains a sizeable number of garment manufacturing jobs-perhaps as many as three-fourths of the 120,000 jobs associated with the garment
industry in the fall of 1983.2 However, the New York garment industry now functions simply as
a spot market, specializing in such unstable components of demand as short-lived style items and
overruns on certain standard goods.
As New York's market position has changed, so has the structure of activity within the
industry. New York firms have sought new ways of coping with uncertainty. Typically, they have
done so by limiting in-house activities to designing and merchandising and engaging independent
firms to do the actual production work on a contract basis. This fundamental distinction between
contractors and manufacturers defines the basic contours of immigrant enterprise. While the
resources needed to become a garment manufacturer are low compared with other sectors of U.S.
industry, they are still beyond the reach of most immigrants. However, the division of labor
between manufacturer and contractor spares the contractor the costs of raw materials as well as
the risks of accumulating inventories. More importantly, this arrangement reduces the
contractor's role to the tasks of recruiting and organizing labor - functions which the immigrant
contractor, with direct connections to the labor force, is ideally suited to perform. Thus, of the
96 immigrant firms I studied, only five designed, manufactured, and sold clothing; the remaining
91 were engaged in contract work for manufacturers.
The instability involved in New York's role as a producer of style items and overruns creates
further opportunities for small immigrant firms. Manufacturers, averse to taking risks, contract
out all but their most crucial activities, such as designing or pattern-making. Sewing, pleating,
and stitching, and textile-cutting operations, previously organized by manufacturers, are now
largely contracted out to small firms. Immigrant contractors generally limit their activities to a
single specialized activity: of the 96 firms, 82 confined their activities to either sewing, pleating
and stitching, or textile cutting.
Even at the contracting level, patterns of entrepreneurshipare circumscribed by constraints of
capital, technology, and skill. Although opening a contracting factory to produce higher-priced
dresses requires little capital, the Hispanic business owners I interviewed had yet to enter this line.
Two factors had impeded them: the complexity involved in preparing quality textiles for sewing
and the role that contractors play in providing technical advice to designers and production
managers. Immigrants had no more success in penetrating the mass-production lines-coats,
pants, undergarments, and jackets. These mass-produced garments are made in assembly-line
fashion by operators who sew together individual parts of a garment; setting up this type of
production line requires technical assistance, training, and costly, specialized machines, all of
which deterred potential immigrant entrepreneurs.
Instead, the immigrant firms worked mainly on short-lived style products, a volatile sector of
the industry where the barriers to entry were low. In these lines, almost any existing factory
space - basements, storefronts, or apartments - would suffice. Low-cost space was still available
in either the vacant factories of New York's manufacturing districts, where lofts in marginal
2. New YorkCity Office of EconomicDevelopment,December10, 1983;personalcommunication.
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64
WALDINGER
buildings were let on a monthly basis, or in the empty storefronts that lined the decaying commercial streets of the immigrant neighborhoods. Since the expensive computerized machinery used
to manufacture standardized goods is ill-suited to constant changes in style and fabric, the
immigrant firms keep out-of-date, operator-guided machines, inadequate for mass production
operations but depreciated by previous use.
Specialization at the low-priced end of the market further contained both capital and labor
investments. As in high-price fashion lines, variable product requirements sharply limit capital
outlays. But where the high-fashion firms substitute costly labor for capital, the market position
of the immigrant firms virtually eliminated the need for skilled labor, thus generating savings on
both capital and labor. With few of the time-consuming and costly finishing operations that
higher-priced firms undertake, the immigrant concerns could use higher-speed machines for
which workers could be quickly trained. Similarly, many immigrant firms worked on cheap,
synthetic materials which enabled them to use industrial hand irons rather than the heavier
machine presses that were standard equipment among larger non-immigrant firms; some
immigrant firms even shipped their products unpressed. In this way the immigrant firms
minimized expenditure both on capital costs for steam-driven machine presses and other equipment, and, most importantly, on the skilled labor necessary to operate more complicated
machinery.
These labor and capital requirements have shaped the pattern of mobility and entrepreneurship
in the New York garment industry. Immigrants found entry to small contracting easy because the
level of technology required no formal training: essential production and managerial skills could
be obtained on the shop floor. The administrative and engineering requirements of small firms
were also slight. Thus, three-fourths of the immigrant owners had moved into ownership from
previous positions as skilled and semi-skilled workers in the garment industry.
Ethnic Succession
Small businesses in New York's garment industry were traditionally owned by Jewish and
Italian immigrants and, later, by their children. Since the late 1960s, however, these two ethnic
groups have been largely replaced by Hispanics because few new, non-immigrant firms have
entered the field. Rapkin's (1962) study of the South Houston Industrial District in lower
Manhattan found that garment and other low-wage manufacturing firms in the area were still
thriving. Yet almost a quarter of these firms had been in existence for 20 years and only one-third
had been operating for six years or less-an indication that stagnation had set in well before
competitive pressures became as intense as they are today. Similarly, Glazer and Moynihan (1963)
noted that the absence of children seeking to take over successful, family-owned manufacturing
firms was pervasive among New York Jews, and only slightly less so among Italians.
Non-immigrant contractors in New York'sgarment industry were still dominated by Jewish and
Italian owners in 1983. However, most of these firms were well-established and family-owned, and
the prospects for succession by the the next generation or by unrelated members of the same
ethnic group were generally poor. In 1981the average non-immigrant contractor in the blouse and
sportswear industries had been in business for 14 years. Stagnation in the ownership of other subindustries was even more pronounced. Zukin (1982) found that few new garment manufacturing
firms had emerged in the South Houston Industrial District 20 years after Rapkin's study, even
though the area still provided 7,000 garment jobs in 1982.
Thus, the withdrawal of established ethnic groups from entrepreneurial activities in the
garment industry has created opportunities for immigrant entrepreneurswith few other prospects
for mobility. Those established entrepreneurs who remained in the New York garment industry
externalized their high-risk activities by contracting out work, thereby creating a demand for
immigrant entrepreneurs.
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65
The pleating industry offers an excellent example of this trend. There are more pleating and
stitching operations in New York City than there are other garment operations, relative to the role
of pleating and stitching in the garment industry. This is because demand is generated both
locally and nationally. Local producers emphasize fashion which, in the mid-1970's, began to
favor pleated dresses and skirts. Large, national firms also use New York City pleaters for particular runs or highly styled lines. As the demand for pleating increased, the established pleating
manufacturers contracted the work out to immigrant-owned factories rather than invest in additional equipment. As a result, Dominican immigrants- who had earlier emerged as the dominant
labor force group - became entrepreneursand opened their own small factories in the late 1970s.
The owners I interviewed were among these new entrepreneurs. Two Dominican cousins, for
example, had immigrated to New York in the late 1970s. In 1980, when they were aged 18 and
20, they invested $16,000 to open a small pleating plant employing 13 people. Another owner
immigrated from Santo Domingo in 1974 and joined forces with his brother-in-law to set up a
small pleating shop employing four workers. After 13 months in business the pair moved into
larger quarters, opened a sewing department, and added an additional 17 workers to their labor
force.
In contrast to the established firms, which designed their own products and provided a large
range of specialized services, the new immigrant firms were confined to a narrow range of
pleating styles and bought their patterns from specialized makers. Similarly, the production
process at the immigrant firms rested on simple, labor-intensive techniques: pleaters hand-folded
a skirt into a cardboard form and passed it to a helper; the helper steamed the pleat and returned
the skirt to the pleater; the pleater unfolded the skirt and sent it to a separate sewing facility.
The same market factors which facilitated immigrants' entry into pleating and stitching also
left immigrant firms highly vulnerable to changes in consumer demand and the business cycle.
By the spring of 1982, pleats were no longer fashionable and the market for the products which
the immigrant firms produced collapsed. According to union officials, half of the firms owned
by Dominicans in 1981 had gone out of business by the end of the second quarter of 1982. When
I returned to firms I had earlier visited I found many had folded or radically declined in size.3
AND INDUSTRIALRELATIONS
ORGANIZATION
Organizationand Recruitment
The organization of the immigrant firms combined social and economic roles. The typical business was a family enterprise in which spouses, siblings, or relatives shared ownership and
managerial responsibilities. Family ownership expanded the pool of potential investors who could
in turn drawn on wider kinship resources. One of the largest of the Hispanic firms I studied was
founded by four brothers who collectively invested $48,000. On a more moderate scale, the five
co-owners of a small family workshop pooled $6,000 in start-up funds - some of which they
3. This observation is congruent with Chaney (1976), who found that the Colombian community in New York
had given birth to few sustained organizations. Sassen-Koob (1979) noted that the Dominican community
had generated more organizations, and hypothesized that the difference between the two communities may
have been related to the different social origins of Dominican and Colombian immigrants to New York.
According to Sassen-Koob, the Dominican population, more rural in origin than the largely urban Colombian group, had a greater need for a more elaborate and organized transition process and thus used traditional
forms of association to respond to the novel needs posed by the new environment. Gurak and Kritz (1982),
however, suggest that this picture of the Dominican immigrant population as a displaced peasantry is heavily
overdrawn. On the other hand, many of the owners I interviewed did come from rural areas of the Dominican
Republic, suggesting that among this portion of the Dominican population associations may indeed play the
role that Sassen-Koob has suggested.
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66
WALDINGER
borrowed from relatives in South America. Family ownership was also compatible with a division
of labor that allowed some family members to engage in business activity while others maintained
outside employment, generating additional capital funds in the process. For example, in one small
firm, two sisters ran the factory during the day. Their husbands continued to hold paying jobs
elsewhere and put time into the family firm after hours.
While family ownership played a critical role in capitalization, it also provided a mechanism
for mobilizing scarce managerial resources. One young Dominican owner said:
My brotherand I went into our parents'businesswhen they werehavingtroublewith managementand
bookkeeping.If we didn'thelp our parents,who don't speakEnglishwell enoughto go uptownand get
work from the manufacturers,
they wouldn'tbe able to stay in business.
Family ownership facilitated the allocation of managerial tasks, allowing firms to save on overhead costs while resolving problems of trust and delegation. The most successful Hispanic firm
I found divided responsibility among three brothers: one supervised production, one ran the
office, and one took charge of sales. In a smaller firm owned and operated by an Ecuadorian
couple and their children, the college-educated daughter managed relations with the "outside,"
obtaining work and bargaining over contract prices; her brother, who possessed only a high
school education, managed the shipping and the flow of material within the plant; their mother
supervised the operators; and the father performed a variety of odd jobs. Dividing managerial
functions in this way - with one family member supervising internal operations while another
managed relations with the "outside"- provided a crucial advantage, since relationships with manufacturers, truckers, and suppliers were volatile and required frequent face-to-face interaction.
Family members could also provide labor if the firm suffered a labor shortage or experienced
production problems due to antiquated and poorly functioning equipment. Some of the smaller
firms, which resembled workshops rather than factories, depended entirely on "unpaid" family
labor. A Bolivian immigrant, her three daughters, and her niece furnished the entire labor force
in one small neighborhood shop; in another small shop two Colombian sisters, their husbands,
and a cousin produced 200 dresses a week. Regardless of size, however, most of the owners spent
their days engaged in production, carrying out skilled jobs too costly for an employee to perform
or completing special operations to which no one was specifically assigned. Family involvement
furnished the organizational resources needed to adjust to sudden shifts in demand and meet
deadlines in an industry where, as one owner put it, "most manufacturers prefer deliveries
yesterday."Family members also allowed firms to maintain output despite irregularitiesin worker
attendance and punctuality. One owner noted:
Whenwe beganthe business,we couldn'taffordto hireenoughworkersor pay enoughhelp.As a result,
we did a good deal of the workourselves,with helpfromour husbands.The factoryusedto operateseven
days a week and thereweretimes when we wouldn'tfinish the work until 2 A.M.
Even where the size of the firm made recruitment beyond the family necessary, the employment
relationship was mediated by kinship, friendship, and ethnic networks. Firms recruited through
the immigrant network, thus building on the social structures that connect immigrants to settlers
and reproducing them within the workplace. Migration chains regularly linked a factory in New
York City to a common hometown in the Dominican Republic. In one factory owned by three
brothers from a small agricultural town in the Dominican Republic, all 18 employees were relatives and friends from the same town. In another factory, all but three of the 32 workers came
from the same rural region in the Dominican Republic as the four brothers who owned the
factory. The frequency with which family groups worked together reflected the strong link
between work and social relationships. One large downtown factory employed three sisters, two
married couples, and two different groups of cousins. A smaller neighborhood shop employed
an aunt and her niece, and a grandmother, her daughter, and her great-niece. While all of the
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ImmigrantEnterprise
67
firms hired Hispanics exclusively, various nationality groups differed in their ability to mobilize
informal networks. Recruitment through national or village networks was most pronounced
among the Dominicans; Colombian, Ecuadorian, and other Latin immigrant owners, by contrast,
were more likely to depend on walk-ins or workers attracted by "help-wanted" signs.4
Authority and Control
Network hiring served a dual function: it reduced risk and established authority. "There is no
money for newspaper ads," explained the owner of one small immigrant firm; for her, as for
others, recruiting friends, relatives, and hometown acquaintances was a cheap and efficient way
to secure additional sources of labor. Hiring casual job-seekers or workers attracted by handwritten signs posted on factory buildings was also a costless means of recruiting. However, hiring
"walk-ins"-a technique known in the personnel literature as "gate hiring"-also reduced the
potential for control.
Network hiring enhanced the potential for control because movement into new positions was
mediated by social relationships. Since sewing skills are transferrablefrom one factory to the next,
factory owners generally face considerable risks in providing training. In the immigrant firms, by
contrast, the importance of social ties reduced the risk. Immigrant firms which engaged in
network recruitment hired workers whose characteristics were largely known, thus screening out
unqualified or inappropriate recruits. One immigrant owner explained:
I won'tprovidetrainingto unknownworkerswho come in looking for a job. WhenI need somebody,I
ask the workersto bringin a relative.That wayone workerhelpsanother;and I don'thaveto worryabout
trainingsomeonewho will latergo find work in anothershop.
Network recruitment further strengthened firm-level attachment by redefining the employment
exchange in terms of personal relationships and loyalties. Many firms systematically hired the
newly arrived friends and relatives of workers already employed in the plant. This produced a
strong sense of obligation among employees, as the following comments suggest:
It's been a traditionto hire the relativesof our workers.We considerthem our friends.
We'realwaysaskedto givejobs to peoplewho havejust come over-that's the systemhere.Wetry to help
out.
I only hire workersas a favorto relativesalreadyemployedin my plant.
I preferto hirepeoplewho havejust come fromSantoDomingo.They'remorewillingto listento me and
are more appreciativeof havinga job.
Network hiring thus allowed immigrant owners to establish authority along paternalistic lines.
Employers reinforced personal loyalties derived from pre-existing social connections by behaving
in ways which were congruent with normal, non-economic roles. They acted as intermediaries to
assist employees with social and legal problems, or provided short-term loans to cover rent or
emergencies. One Dominican employer explained:
The shop is like a family- peoplebringme problemseveryday.I helpthemwith applications,fill out their
immigrationpapers,call the hospitalto find out aboutrelatives,and helpwith anythinginvolvingEnglish.
Ownership also gave owners strategic importance in immigration matters. Employers assisted
workers in bringing relatives over from the home country, or sponsored prospective immigrants
who needed a guarantee of employment in order to obtain permanent residency. Several owners
4. This has a direct parallel in the experience of the Korean-American wig industry, which flourished in the
late 1960s and early 1970s and then virtually disappeared,taking with it many of the Koreansmall
businessmenwho had prosperedfrom sellingKorean-madewigs in poor blackand PuertoRicanneighborhoods (Kim, 1981:121).
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WALDINGER
68
said their bookkeepers regularly handled immigration applications submitted by their workers.
Similarly, employment practices took into account the needs of special labor force groups. Work
hours and attendance were often flexible, widening access to the labor market for mothers with
school-age children who could only work part time. As one owner observed, "the pieceworkers
aren't held to a schedule [as long as] they do their work." Another immigrant owner commented
that "regularhours" were desirable, but that pieceworkers enjoyed considerable flexibility as long
as they produced their quota.
By accommodating workers' diverse needs through network hiring, brokerage, and flexibility,
employment practices in the immigrant firms thus promoted the view that ethnic labor and ethnic
management shared common interests. Owners presented an "egalitarian"image and, involving
themselves in production activities, encouraged workers to identify with the firm. The Dominican
owner of a medium-sized sportswear plant said:
I work on the machinesjust like the workersdo. We all earn our money from hereand we all sharean
interestin seeingthat the work is done right.
On the other hand, paternalism constrained owners with the obligations inherent in traditional
relationships. Harsh discipline and other direct control techniques -common to small firms on
tight deadlines yet also subject to frequent production bottlenecks -threatened to upset the
understandings and expectations on which the ethnic employment exchange was based. Said the
owner of a factory employing 25 persons, half of them relatives:
ThoughI employrelativesin the factory,theyaren'tmoreresponsiblethanthe others.Theytakeadvantage
of the relationshipand I only hirethem for humanreasons.
Similarly, the Colombian owner of a textile-cutting shop commented that "when you hire fellow
nationals they don't feel that they have to produce."
Skill Training and Business Aspirations
Because the growth of immigrant firms stimulates further entrepreneurialactivity among the
immigrant population, the structure of the ethnic economy generates positive work orientations.
"I worked mainly for other Dominicans," said the owner of one small workshop. "I think that
it's easier to get ahead if you work for a compatriot." In fact, three out of every 10 owners had
previously worked for another Hispanic owner and among those owners with prior supervisory
experience, two-thirds had been employed in immigrant-owned firms. The relationship between
previous employment in an ethnic firm and entrepreneurialactivity derived in part from the organization of the immigrant firm itself. Operational definitions of employer and employee were
vague because the immigrant firm was severely understaffed; as a result, jobs were defined flexibly and included several different tasks. Furthermore, the expectation that paid family members
would participate in all aspects of the business promoted training in managerial skills and the
acquisition of those contacts critical for business success. By hiring workers through pre-existing
social connections, recruitment practices also created a wide basis for trust among those
immigrants tied to a common network.
The expansion of immigrant business also stimulated entrepreneurial activity. When I asked
owners why they went into business, they emphasized the appeal of autonomy, their distaste for
the regimentation of factory work, restricted opportunities as a blue-collar worker, and their lack
of education:
I like to do thingsfor myself.I hate to puncha time card.I wentinto businessbecauseas a workerI was
exploited.I wantedindependenceand freedom.
As a workeryou can neveradvanceas much, ever.
I thoughtthat this would be the only way to get ahead. I wantedmore than a salary.
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ImmigrantEnterprise
69
Businessis the only way to get ahead if you don't havemuch education.
I came to New Yorkto study,but my Englishis only so-so. The best way to get aheadis to study,then
to go into business.
The success of immigrant businessmen heightened aspirations in the broader immigrant
community, thus encouraging workers to obtain training in production and managerial skills. The
owners' perceptions of opportunities were often linked to the experiences of other immigrants:
Most of my friendseitherwant to be businessmenor are in businessalready.
This is the easiestway to get ahead.At this point, manyyoung Dominicansare gettinginto business.
This common orientation toward small business generates a favorable environment within the
immigrant firm since, as Bailey (1983) has pointed out, the social distinctions between workers
and owners are obscured when immigrant owners are former workers and their employees are
workers who see themselves as prospective entrepreneurs.
Industrial Relations
The obligations incurred by workers through their employment in an immigrant firm induced
adjustments in pay and benefits which in turn contributed to the viability of the firm. Immigrant
firms relaxed normal expectations about productivity and skill because new workers typically
absorbed some of the costs of training. In a few firms, new arrivals worked the first day or two
without pay; other firms did not enter the new workers on the books for record-keeping purposes
until several weeks had passed; still others paid workers on an hourly basis but set the wage below
the legal minimum.
More importantly, workers in immigrant firms frequently worked for less than the average
industry wage and under conditions that were significantly inferior in every respect - factors of
no mean importance when a firm is competing with technologically and managerially superior
companies. Three-fourths of the owners claimed to pay the minimum wage or even less, while
benefit packages were non-existent. In contrast, hourly wages in unionized companies were set
33 percent above the legal minimum wage. The owners of unionized firms also paid in 20 percent
of the total wage to a variety of benefit funds.5
Immigrant firms regularly evaded codes governing labor standards. Investigations conducted
by the New York State Department of Labor cited nine firms in the Corona-Jackson Heights area
for failure to record hours worked and wages paid as required by law, violations of home work
laws, and failure to pay the minimum wage (New York State Department of Labor 1982). While
I was interviewing owners in the factories, I noticed that clocks were either absent or disconnected, time cards were rarely used, and wages were quoted in weekly, rather than hourly, form,
suggesting that piece-rate payments often fell below the legal minimum when competitive pressures became severe. Forty-four of the factories paid their workers in cash, a form of payment
which facilitates evasion of tax and wage laws. Although working at home has been banned in
New York State since 1945, the classified pages of the ethnic newspapers regularly contained
advertisements for home workers. Several owners of neighborhood factories compensated for
their technological deficiencies by employing people to sew at home, assigning them specific,
time-consuming tasks such as sewing collars.
Finally, employing immigrants in a context where obligations were understood to be both
informal and reciprocal discouraged unionization. The International Ladies' Garment Workers'
Union is the principal union in the field; while weakened by the outflow of jobs to anti-union
5. Muzaffar Chishti, Research Director, Local 23-25, International Ladies' Garment Workers'Union, March
10, 1983: personal communication.
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70
WALDINGER
areas in the southern United States, it remains strong in New York City. Union officials in New
York City maintained that non-immigrant firms were almost entirely unionized, a small number
of long-standing non-union holdouts excepted. Yet ILGWU leaders conceded that they had
encountered great difficulty in penetrating new Hispanic-owned firms (Mazur, 1979). One union
official stated:
The union alwayscompeteswith the boss for the workers'loyalty.The workersare pulledtowardsboth
sides.Remember,the bossesare with the workers35 hoursa weekall yearlong; if we'reluckythe union
businessagentvisits the shop twice,maybethreetimesa month. Still, the workersusuallyend up closer
to us. But when the workeris also a relativeof the boss, or if not a relative,then a landsman[a
hometowner],the competitionis much, much tougher.
Indeed, kin and friendship ties virtually immunized the Hispanic firms from union organizing
efforts. The owners, strongly anti-union, manipulated their connections to the workforce to evade
unionization. As one owner pointed out:
My shopis like a family.Whenmy workersneedassistance,I helpthem.There'sno room for a unionhere.
Nonetheless, 19 of the 96 firms had been unionized; five were under contract with the Amalgamated Clothing and Textile Workers Union (ACTWU) and the rest with the ILGWU. In these
cases, however, the impetus to unionization had come from external pressure, not from an
organizing drive among the workers themselves. Labor agreements in the garment trades oblige
unionized manufacturers to engage unionized contractors exclusively. In those cases where a nonunion contractor is working for a union manufacturer, the threat to shut off the flow of work
often induces a non-union contractor to go union: such was the case in the unionized Hispanicowned firms I surveyed.
However, inducing a contractor to sign a union contract is one thing; succeeding in organizing
the workers and making them members of the union is quite another. Coming "over the top,"
as it did in these Hispanic firms, the union lacked an organic relationship to the workers. Unionization served to have little impact within the immigrant firms and several immigrant owners of
unionized firms indicated that only a handful of workers had joined the union.
CONCLUSION
This paper has examined the development and organization of immigrant-owned firms in New
York City's garment industry. Immigrant firms have prospered because the economic environment supports neophyte capitalists who have litte capital or technological resources but are rich
in human resources. Changes in the structure of the garment industry have transformed New York
City into a spot market, favoring small firms with flexible arrangements and relatively primitive
production-line technologies. Shifts in ownership patterns have also reflected the varying
response of entrepreneurial groups to increased uncertainty in the environment. Older
entrepreneurial groups have withdrawn from high-risk business activities, thus creating new
opportunities for immigrant owners.
The central problem facing small garment firms is that of organizing and maintaining the labor
force: herein lies the central competitive advantage of the immigrant entrepreneur. Given heavy
managerial demands and limited resources, recruiting and training labor is an expensive endeavor
for the small owner. Moreover, the absence of promotion opportunities and the friction caused
by close, personal supervision leads to steady turnover in personnel. In the immigrant firm, interconnections between the immigrant community and the workplace resolve these organizational
dilemmas. Family involvement provides a mechanism for mobilizing scarce managerial and labor
resources. Hiring workers through the immigrant network also strengthens the employment relationships and fosters skill training.
Are immigrant firms just "sweatshops"in disguise? My case study suggests they are not. While
it is true that owners' informal ties to the broader immigrant community initially provide them
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ImmigrantEnterprise
71
with privileged access to a cheaper source of labor - a crucial advantage in competing against
non-immigrant firms-recruiting through the immigrant network also stabilizes work relationships in a context of loosely defined work roles. This means workers acquire those managerial
and production skills which permit them to move into entrepreneurial positions. For workers
employed in the immigrant firm, the opportunity to acquire these skills compensates for low pay
and provides the motivation to learn a variety of jobs. Once in place, these informal mechanisms
of skill transmission facilitate the growth and proliferation of immigrant firms beyond the
original market base. Thus, the small immigrant firm, despite its image as a "sweatshop," serves
as a ladder for immigrant social mobility.
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